Attached files
| file | filename |
|---|---|
| EXCEL - IDEA: XBRL DOCUMENT - BOSTON FINANCIAL TAX CREDIT FUND VIII LP | Financial_Report.xls |
| EX-32.2 - BOSTON FINANCIAL - BOSTON FINANCIAL TAX CREDIT FUND VIII LP | tc8fy13ex32-2.htm |
| EX-31.2 - BOSTON FINANCIAL - BOSTON FINANCIAL TAX CREDIT FUND VIII LP | tc8fy13ex31-2.htm |
| EX-32.1 - BOSTON FINANCIAL - BOSTON FINANCIAL TAX CREDIT FUND VIII LP | tc8fy13ex32-1.htm |
| EX-31.1 - BOSTON FINANCIAL - BOSTON FINANCIAL TAX CREDIT FUND VIII LP | tc8q3fy13ex31-1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2012
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to__________________
Commission file number 0-26522
Boston Financial Tax Credit Fund VIII, A Limited Partnership
(Exact name of registrant as specified in its charter)
Massachusetts 04-3205879
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
101 Arch Street, Boston, Massachusetts 02110-1106
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 439-3911
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes X No____.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes X No____.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b -2 of the Exchange Act.
Large accelerated filer ___ Accelerated Filer ___
Non-accelerated filer ___ (Do not check if a smaller reporting company) Smaller reporting company X
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b -2 of the Exchange Act).
Yes____ No X .
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Condensed Balance Sheets (Unaudited) - December 31, 2012
and March 31, 2012 1
Condensed Statements of Operations (Unaudited) - For the Three and Nine
Months Ended December 31, 2012 and 2011 2
Condensed Statement of Changes in Partners' Equity (Unaudited) -
For the Nine Months Ended December 31, 2012 3
Condensed Statements of Cash Flows (Unaudited) - For the Nine
Months Ended December 31, 2012 and 2011 4
Notes to the Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk 13
Item 4. Controls and Procedures 13
PART II. OTHER INFORMATION
Item 6. Exhibits 14
SIGNATURE 15
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONDENSED BALANCE SHEETS
December 31, 2012 and March 31, 2012
(Unaudited)
|
Assets
|
December 31
|
March 31
|
||||||
|
Cash and cash equivalents
|
$ | 734,150 | $ | 94,770 | ||||
|
Investments in Local Limited Partnerships (Note 1)
|
- | 2,000,439 | ||||||
|
Other assets
|
476 | 408 | ||||||
|
Total Assets
|
$ | 734,626 | $ | 2,095,617 | ||||
|
Liabilities and Partners' Equity
|
||||||||
|
Due to affiliate
|
$ | 70,704 | $ | 1,130,942 | ||||
|
Accrued expenses
|
21,914 | 23,572 | ||||||
|
Total Liabilities
|
92,618 | 1,154,514 | ||||||
|
General, Initial and Investor Limited Partners' Equity
|
642,008 | 941,103 | ||||||
|
Total Liabilities and Partners' Equity
|
$ | 734,626 | $ | 2,095,617 | ||||
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended December 31, 2012 and 2011
(Unaudited)
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
|
December 31,
|
December 31,
|
December 31,
|
December 31,
|
|||||||||||||
|
2012
|
2011
|
2012
|
2011
|
|||||||||||||
|
Revenue:
|
||||||||||||||||
|
Investment
|
$ | 242 | $ | 129 | $ | 1,020 | $ | 437 | ||||||||
|
Total Revenue
|
242 | 129 | 1,020 | 437 | ||||||||||||
|
Expenses:
|
||||||||||||||||
|
Asset management fees, affiliate
|
70,704 | 68,644 | 212,111 | 205,933 | ||||||||||||
|
Impairment on investments in Local
|
||||||||||||||||
|
Limited Partnerships
|
- | - | - | 83,000 | ||||||||||||
|
General and administrative
|
||||||||||||||||
|
(includes reimbursements to an affiliate
|
||||||||||||||||
|
in the amounts of $22,750 and $12,444
for the three months and $46,991 and
|
||||||||||||||||
|
$36,515 for the nine months ended
|
||||||||||||||||
|
December 31, 2012 and 2011,
|
||||||||||||||||
|
respectively)
|
46,052 | 33,745 | 118,059 | 101,745 | ||||||||||||
|
Amortization
|
- | 437 | 264 | 1,311 | ||||||||||||
|
Total Expenses
|
116,756 | 102,826 | 330,434 | 391,989 | ||||||||||||
|
Loss before equity in income
|
||||||||||||||||
|
of Local Limited Partnerships
|
||||||||||||||||
|
and loss on disposition of investments in
|
||||||||||||||||
|
Local Limited Partnerships
|
(116,514 | ) | (102,697 | ) | (329,414 | ) | (391,552 | ) | ||||||||
|
Equity in income of Local Limited
|
||||||||||||||||
|
Partnerships (Note 1)
|
- | 80,177 | 59,722 | 91,639 | ||||||||||||
|
Loss on disposition of investments in Local
|
||||||||||||||||
|
Limited Partnerships (Note 1)
|
- | - | (29,403 | ) | - | |||||||||||
|
Net Loss
|
$ | (116,514 | ) | $ | (22,520 | ) | $ | (299,095 | ) | $ | (299,913 | ) | ||||
|
Net Loss allocated:
|
||||||||||||||||
|
General Partner
|
$ | (1,165 | ) | $ | (225 | ) | $ | (2,991 | ) | $ | (2,999 | ) | ||||
|
Limited Partners
|
(115,349 | ) | (22,295 | ) | (296,104 | ) | (296,914 | ) | ||||||||
| $ | (116,514 | ) | $ | (22,520 | ) | $ | (299,095 | ) | $ | (299,913 | ) | |||||
|
Net Loss Per Limited Partner
|
||||||||||||||||
|
Unit (36,497 Units)
|
$ | (3.16 | ) | $ | (0.61 | ) | $ | (8.11 | ) | $ | (8.14 | ) | ||||
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
CONDENSED STATEMENT OF CHANGES IN PARTNERS' EQUITY
For the Nine Months Ended December 31, 2012
(Unaudited)
|
Initial
|
Investor
|
|||||||||||||||
|
General
|
Limited
|
Limited
|
||||||||||||||
|
Partner
|
Partner
|
Partners
|
Total
|
|||||||||||||
|
Balance at March 31, 2012
|
$ | 9,412 | $ | 100 | $ | 931,591 | $ | 941,103 | ||||||||
|
Net Loss
|
(2,991 | ) | - | (296,104 | ) | (299,095 | ) | |||||||||
|
Balance at December 31, 2012
|
$ | 6,421 | $ | 100 | $ | 635,487 | $ | 642,008 | ||||||||
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF CASH FLOWS
For the Nine Months Ended December 31, 2012 and 2011
(Unaudited)
|
2012
|
2011
|
|||||||
|
Cash flows from operating activities:
|
||||||||
|
Net Loss
|
$ | (299,095 | ) | $ | (299,913 | ) | ||
|
Adjustments to reconcile net loss to net cash used
|
||||||||
|
for operating activities:
|
||||||||
|
Equity in income of Local Limited Partnerships
|
(59,722 | ) | (91,639 | ) | ||||
|
Impairment on investments in Local Limited Partnerships
|
- | 83,000 | ||||||
|
Loss on disposition of investments in Local Limited
|
||||||||
|
Partnerships
|
29,403 | - | ||||||
|
Amortization
|
264 | 1,311 | ||||||
|
Increase (decrease) in cash arising from changes
|
||||||||
|
in operating assets and liabilities:
|
||||||||
|
Other assets
|
(68 | ) | (69 | ) | ||||
|
Due to affiliate
|
(1,060,238 | ) | 218,377 | |||||
|
Accrued expenses
|
(1,658 | ) | (6,531 | ) | ||||
|
Net cash used for operating activities
|
(1,391,114 | ) | (95,464 | ) | ||||
|
Cash flows from investing activities:
|
||||||||
|
Proceeds received from disposition of investments in
|
||||||||
|
Local Limited Partnerships
|
2,015,000 | - | ||||||
|
Cash distributions received from Local Limited
|
||||||||
|
Partnerships
|
15,494 | 47,766 | ||||||
|
Net cash provided by investing activities
|
2,030,494 | 47,766 | ||||||
|
Net increase (decrease) in cash and cash equivalents
|
639,380 | (47,698 | ) | |||||
|
Cash and cash equivalents, beginning
|
94,770 | 165,891 | ||||||
|
Cash and cash equivalents, ending
|
$ | 734,150 | $ | 118,193 | ||||
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
The unaudited financial statements presented herein have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America. These statements should be read in conjunction with the audited financial statements and notes thereto included with the Annual Report on Form10-K of Boston Financial Tax Credit Fund VIII, a Limited Partnership (the “Fund”) for the year ended March 31, 2012. In the opinion of the general partner of the Fund, Arch Street VIII, Inc. (the “General Partner”), these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Fund's financial position and results of operations. The results of operations for the periods may not be indicative of the results to be expected for the year.
The General Partner has elected to report results of the limited partnerships or limited liability companies in which it invests (the “Local Limited Partnerships”) on a 90-day lag basis because the Local Limited Partnerships report their results on a calendar year basis. Accordingly, the financial information of the Local Limited Partnerships that is included in the accompanying financial statements is as of September 30, 2012 and 2011 and for the nine months then ended.
Generally, profits, losses, tax credits and cash flows from operations are allocated 99% to the Limited Partners and 1% to the General Partner. Net proceeds from a sale or refinancing will be allocated 95% to the Limited Partners and 5% to the General Partner, after certain priority payments. The General Partner may have an obligation to fund deficits in its capital account, subject to limits set forth in the Fund’s Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”). However, to the extent that the General Partner’s capital account is in a deficit position, certain items of net income may be allocated to the General Partner in accordance with the Partnership Agreement.
1. Investments in Local Limited Partnerships
The Fund currently has limited partner or member interests in two Local Limited Partnerships, which were organized for the purpose of owning and operating multi-family housing complexes, all of which are government assisted. The Fund's ownership interest in one of the Local Limited Partnerships is 99%, and 77% in the other. The Fund may have negotiated or may negotiate options with the Local General Partners to purchase or sell the Fund’s interests in the Local Limited Partnerships at the end of the 15-year period during which properties that receive Tax Credits must remain in compliance with rent restrictions and set-aside requirements (the “Compliance Period”) for nominal prices. In the event that the Properties are sold to third parties, or upon dissolution of the Local Limited Partnerships, proceeds will be distributed according to the terms of each Local Limited Partnership agreement.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
1. Investments in Local Limited Partnerships (continued)
The following is a summary of investments in Local Limited Partnerships at December 31, 2012 and March 31, 2012:
|
December 31
|
March 31
|
|||||||
|
Capital contributions paid to Local Limited Partnerships
|
$ | 4,015,376 | $ | 15,943,196 | ||||
|
Cumulative equity in losses of Local Limited Partnerships (excluding
|
||||||||
|
cumulative unrecognized losses of $862,431 and $3,202,928 at
|
||||||||
|
December 31 and March 31, 2012, respectively)
|
(2,971,814 | ) | (8,813,573 | ) | ||||
|
Cumulative cash distributions received from Local Limited Partnerships
|
(43,323 | ) | (480,795 | ) | ||||
|
Investments in Local Limited Partnerships before adjustments
|
1,000,239 | 6,648,828 | ||||||
|
Excess investment costs over the underlying assets acquired:
|
||||||||
|
Acquisition fees and expenses
|
49,892 | 619,931 | ||||||
|
Cumulative amortization of acquisition fees and expenses
|
(15,131 | ) | (187,865 | ) | ||||
|
Investments in Local Limited Partnerships before valuation allowance
|
||||||||
|
and impairment
|
1,035,000 | 7,080,894 | ||||||
|
Cumulative valuation allowance on advances to Local Limited
|
||||||||
|
Partnerships
|
- | (1,417,455 | ) | |||||
|
Cumulative impairment on investments in Local Limited Partnerships
|
(1,035,000 | ) | (3,663,000 | ) | ||||
|
Investments in Local Limited Partnerships
|
$ | - | $ | 2,000,439 | ||||
The Fund has recorded an impairment for its investments in certain Local Limited Partnerships in order to appropriately reflect the estimated net realizable value of these investments.
The Fund’s share of net losses of the Local Limited Partnerships for the nine months ended December 31, 2012 and 2011 is $423,985 and $523,808, respectively. For the nine months ended December 31, 2012 and 2011, the Fund has not recognized $543,360 and $615,447, respectively, of equity in losses relating to certain Local Limited Partnerships in which cumulative equity in losses and cumulative distributions exceeded its total investment in the Local Limited Partnerships. Previously unrecognized losses of $59,653 are included in losses recognized during the nine months ended December 31, 2012.
During the nine months ended December 31, 2012, the Fund disposed of its interest in two Local Limited Partnerships. The Fund received $2,015,000 from the disposition of these interests. The Fund’s investment value at the time of the dispositions was $2,044,403 resulting in a loss on disposition of investments in Local Limited Partnerships of $29,403 for the nine months ended December 31, 2012.
During the nine months ended December 31, 2011, the Fund disposed of its interest in one Local Limited Partnership. The Fund’s investment value at the time of disposition was zero resulting in no gain or loss on disposition of investment in Local Limited Partnership for the nine months ended December 31, 2011.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
2. Significant Subsidiaries
The following Local Limited Partnership invested in by the Fund represents more than 20% of the Fund’s total assets or equity as of December 31, 2012 or 2011 or net losses for the three months then ended. The following financial information represents the performance of this Local Limited Partnership for the three months ended September 30, 2012 and 2011:
|
2012
|
2011
|
|||||||
|
Oak Knoll Renaissance, Limited Partnership
|
||||||||
|
Revenue
|
N/A | $ | 524,808 | |||||
|
Net Income
|
N/A | $ | 80,987 | |||||
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Certain matters discussed herein constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The use of words like “anticipate,” “estimate,” “intend,” “project,” “plan,” “expect,” “believe,” “could,” “will,” “may,” “might” and similar expressions are intended to identify such forward-looking statements. The Fund intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements and is including this statement for purposes of complying with these safe harbor provisions. Although the Fund believes the forward-looking statements are based on reasonable assumptions and current expectations, the Fund can give no assurance that its expectations will be attained. Actual results and timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors, including, without limitation: (i) possible reduction in rental income due to an inability to maintain high occupancy levels or adequate rental levels; (ii) possible adverse changes in general economic conditions and adverse local conditions, such as competitive overbuilding, a decrease in employment rates or adverse changes in real estate laws, including building codes; (iii) possible future adoption of rent control legislation which would not permit increased costs to be passed on to the tenants in the form of rent increases or which would suppress the ability of the Local Limited Partnership to generate operating cash flow; and (iv) general economic and real estate conditions and interest rates.
The Fund is a Massachusetts limited partnership organized to invest as a limited partner or member in other limited partnerships or limited liability companies (collectively, "Local Limited Partnerships") which own and operate apartment complexes (each, a “Property”) which are eligible for low income housing tax credits (“Tax Credits”) that may be applied against the federal income tax liability of an investor. The Fund’s objectives are to: (i) provide investors with annual Tax Credits which they may use to reduce their federal income tax liability; (ii) preserve and protect the Fund’s capital; (iii) provide cash distributions from the operations of Local Limited Partnerships; and (iv) provide cash distributions from sale or refinancing transactions. Arch Street VIII Limited Partnership ("Arch Street L.P."), a Massachusetts limited partnership consisting of Arch Street VIII, Inc., a Massachusetts corporation ("Arch Street, Inc.") as the sole general partner, ALZA Corporation as Class A limited partner (90%) and Boston Financial BFG Investments, LLC, as Class B limited partner (9%), is the sole General Partner of the Fund. Arch Street L.P. and Arch Street, Inc. are affiliates of Boston Financial Investment Management, LP (“Boston Financial”). The fiscal year of the Fund ends on March 31.
Critical Accounting Policies
The Fund’s accounting policies include those that relate to its recognition of investments in Local Limited Partnerships using the equity method of accounting. The Fund’s policy is as follows:
The Fund is involved with the Local Limited Partnerships in which it invests as a non-controlling equity holder. The investments in Local Limited Partnerships are made primarily to obtain federal income Tax Credits on behalf of the Fund’s investors. Such Tax Credits are not reflected on the books of the Fund. The Local Limited Partnerships are Variable Interest Entities (“VIEs”) because the owners of the equity at risk do not have the power to direct their operations. A VIE must be consolidated by the entity which is determined to be the VIE’s primary beneficiary which is the entity that has both (i) the power to direct the activities of the VIE and (ii) the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. Additionally, a VIE requires continual reassessment of the primary beneficiary.
The general partners of the Local Limited Partnerships (the “Local General Partners”), who are considered to be the primary beneficiaries, direct the activities of the Local Limited Partnerships and are responsible for maintaining compliance with the Tax Credit program and for providing subordinated financial support in the event operations cannot support debt and Property tax payments. Because the Fund is not the primary beneficiary of these Local Limited Partnerships, it accounts for its investments using the equity method of accounting.
Under the equity method, the investments in Local Limited Partnerships are carried at cost, adjusted for the Fund’s share of net income or loss and for cash distributions from the Local Limited Partnerships. Equity in income or loss of the Local Limited Partnerships is included currently in the Fund's operations. A liability is recorded for delayed equity capital contributions to Local Limited Partnerships. In the event that a Local Limited Partnership records other comprehensive income or loss, the Fund will evaluate its impact on the Fund and determine whether it should be included as other comprehensive income or loss in the statement of partners’ equity.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Critical Accounting Policies (continued)
Under the equity method, a Local Limited Partnership investment will not be carried below zero. To the extent that a Local Limited Partnership with a carrying value of zero incurs additional losses, the excess losses will be suspended and offset against future income. Income from these Local Limited Partnerships will not be recorded until all of the related suspended losses have been offset. To the extent that a Local Limited Partnership with a carrying value of zero distributes cash to the Fund, the distribution is recorded as income in the Fund’s statement of operations.
The Fund's exposure to economic and financial statement losses is limited to its investment balance in the Local Limited Partnership and estimated future funding commitments. To the extent that the Fund does not receive the full amount of Tax Credits specified in its initial investment contribution agreement, it may be eligible to receive payments from the Local General Partner under the provisions of Tax Credit guarantees. The Fund may be subject to additional losses to the extent of any additional financial support that the Fund voluntarily provides in the future. The Fund, through its ownership percentages, may participate in Property disposition proceeds, the timing and amounts of which are unknown. The Fund does not guarantee any of the mortgages or other debt of the Local Limited Partnerships.
The Fund is subject to risks inherent in the ownership of Property which are beyond its control, such as fluctuations in occupancy rates and operating expenses, variations in rental schedules, proper maintenance of facilities and continued eligibility of Tax Credits. If the cost of operating a Property exceeds the rental income earned thereon, the Fund may deem it in its best interest to voluntarily provide funds and advances in order to protect its investment. The Fund assesses the collectability of any advances at the time the advance is made and records a reserve if collectability is not reasonably assured.
Periodically, the carrying value of each investment in Local Limited Partnership is tested for other-than-temporary impairment. If an other-than-temporary decline in carrying value exists, a provision is recorded to reduce the investment to the sum of the estimated remaining benefits. The estimated remaining benefits for each Local Limited Partnership consists of the estimated future benefit from tax losses and Tax Credits over the estimated life of the investment and the estimated residual proceeds at disposition. Estimated residual proceeds are allocated in accordance with the terms of the partnership agreement of each Local Limited Partnership. Generally, the carrying values of most Local Limited Partnerships will decline through losses and distributions. However, the Fund may record an impairment loss if the expiration of Tax Credits outpaces losses and distributions from a Local Limited Partnership.
Liquidity and Capital Resources
At December 31, 2012, the Fund had cash and cash equivalents of $734,150, as compared to $94,770 at March 31, 2012. The increase is primarily attributable to proceeds received from the disposition of investment in one Local Limited Partnership and cash distributions received from Local Limited Partnerships, partially offset by cash used for operating activities, including the payment of asset management fees.
The General Partner initially designated 5% of the Gross Proceeds as Reserves, as defined in the Partnership Agreement. The Reserves were established to be used for working capital of the Fund and contingencies related to the ownership of Local Limited Partnership interests. The General Partner may increase or decrease such Reserves from time to time, as it deems appropriate. At December 31, 2012 and March 31, 2012, approximately $713,000 and $37,000, respectively, has been designated as Reserves.
To date, professional fees relating to various Property issues totaling approximately $75,000 have been paid from Reserves. In the event a Local Limited Partnership encounters operating difficulties requiring additional funds, the Fund's management might deem it in its best interest to voluntarily provide such funds in order to protect its investment. As of December 31, 2012, the Fund has advanced approximately $1,417,000 to Local Limited Partnerships to fund operating deficits.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Liquidity and Capital Resources (continued)
The General Partner believes that the investment income earned on the Reserves, along with cash distributions received from Local Limited Partnerships, to the extent available, will be sufficient to fund the Fund’s ongoing operations. Reserves may be used to fund operating deficits, if the General Partner deems funding appropriate. To date, the Fund has used approximately $380,000 of operating funds and proceeds from disposition of investments in Local Limited Partnerships to replenish Reserves. If Reserves are not adequate to cover the Fund’s operations, the Fund will seek other financing sources including, but not limited to, the deferral of asset management fees paid to an affiliate of the General Partner or working with Local Limited Partnerships to increase cash distributions.
Since the Fund invests as a limited partner, the Fund has no contractual duty to provide additional funds to the Local Limited Partnerships beyond its specified investment. Thus, as of December 31, 2012, the Fund had no contractual or other obligation to any Local Limited Partnership which had not been paid or provided for.
Cash Distributions
No cash distributions were made during the nine months ended December 31, 2012 and 2011.
Results of Operations
Three Month Period
For the three months ended December 31, 2012, the Fund’s operations resulted in a net loss of $116,514 as compared to a net loss of $22,520 for the three months ended December 31, 2011. The increase in net loss is primarily attributable to a decrease in equity in income recognized by the Fund and an increase in general and administrative expenses recorded by the Fund. Equity in income of Local Limited Partnerships recognized by the Fund decreased because the Fund disposed of the last Local Limited Partnership with a remaining investment value in the first quarter of the current year. General and administrative expenses increased due to an increase in charges for operations and administrative expenses necessary for the operations of the Fund during the three months ended December 31, 2012, as compared to the three months ended December 31, 2011.
Nine Month Period
For the nine months ended December 31, 2012, the Fund’s operations resulted in a net loss of $299,095 as compared to a net loss of $299,913 for the nine months ended December 31, 2011. The decrease in net loss is primarily attributable to a decrease in impairment recorded on investments in Local Limited Partnerships, partially offset by a decrease in equity in income of Local Limited Partnerships recognized by the Fund, an increase in loss on disposition of investments in Local Limited Partnerships, and an increase in general and administrative expenses recorded by the Fund. The decrease in impairment on investments in Local Limited Partnerships is primarily due to no impairment expense incurred during the nine months ended December 31, 2012. The decrease in equity in income is due to a decrease in income recorded by certain Local Limited Partnerships in the current period as compared to the same period in 2011. The increase in loss on disposition of investments in Local Limited Partnerships is due to a disposition of an investment in Local Limited Partnership in the first quarter of the current year. General and administrative expenses increased due to an increase in charges for operations and administrative expenses necessary for the operations of the Fund during the nine months ended December 31, 2012, as compared to the nine months ended December 31, 2011.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Portfolio Update
As of December 31, 2012, the Fund’s investment portfolio consists of limited partner interests in two Local Limited Partnerships, each of which owns and operates a multi-family apartment complex and each of which had generated, but no longer generates, Tax Credits. Since inception, the Fund generated Tax Credits of approximately $1,429 per Limited Partner Unit. The aggregate amount of Tax Credits generated by the Fund was consistent with the objective specified in the Fund’s prospectus.
Properties that receive Tax Credits must remain in compliance with rent restriction and set aside requirements for at least 15 calendar years from the date the Property is placed in service (“Compliance Period”). Failure to do so would result in the recapture of a portion of the Property’s Tax Credits. The Compliance Period expired for both Properties on or prior to December 31, 2009.
The General Partner will continue to closely monitor the operations of the Properties and will formulate disposition strategies with respect to the Fund’s remaining Local Limited Partnership interests. The Fund shall dissolve and its affairs shall be wound up upon the disposition of the final Local Limited Partnership interest and other assets of the Fund. Investors will continue to be Limited Partners, receiving Schedule K-1s and quarterly and annual reports, until the Fund is dissolved.
The Fund is not a party to any pending legal or administrative proceeding, and to the best of its knowledge, no legal or administrative proceeding is threatened or contemplated against it.
Property Discussions
Both Properties in which the Fund has an interest operated above breakeven for the nine months ended September 30, 2012. The General Partner, in the normal course of the Fund’s business, is arranging for the future disposition of the Fund’s interest in all of the Local Limited Partnerships. The following Property discussions focus on all such Properties.
As previously reported, the General Partner anticipated the Fund’s interest in the Local Limited Partnership that owns Spring Wood Apartments, located in Tallahassee, Florida, would be terminated upon the sale of the Property in the third quarter of 2008, a transaction that could have resulted in net sales proceeds to the Fund of approximately $1,600,000, or $44.20 per Unit. In July 2008, the potential buyer withdrew their interest to purchase this Property. Subsequently, the General Partner explored an alternative exit strategy for this Local Limited Partnership interest. The General Partner previously anticipated the Fund’s interest in the Local Limited Partnership would terminate no earlier than 90 days upon the sale of the Property in June 2011 for a nominal sum. The transfer of the Fund’s interest in the Local Limited Partnership ultimately occurred on May 31, 2011 for no consideration. The actual 2011 taxable income was $232,171, or $6.36 per Unit. The Compliance Period ended on December 31, 2009. The Fund no longer has an interest in this Local Limited Partnership.
As previously reported, the General Partner anticipated the Fund’s interest in the Local Limited Partnership that owns Oak Knoll Renaissance, located in Gary, Indiana, would terminate late in 2011. However, the General Partner and the Local General Partner continued to negotiate an exit strategy to dispose of the Fund’s interest in the Local Limited Partnership. A disposition of this interest to an affiliate of the Local General Partner occurred on May 25, 2012 and yielded net sales proceeds of $2,015,000, or $55.21 per Unit. As a result of this transaction, the General Partner estimates the 2012 tax loss to be approximately $2,840,000, or $77.81 per Unit. The Fund no longer has an interest in this Local Limited Partnership.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Property Discussions (continued)
As previously reported, the General Partner anticipated the Fund’s interest in the Local Limited Partnership that owns Live Oak Apartments, located in West Palm Beach, Florida, would terminate as a result of the Property foreclosing in early 2010. However, the General Partner worked with the Local Limited Partnership to improve operations, minimize deficits and keep debt service payments current. The Fund advanced $209,146 to cover May, June and July 2009 debt service payments. The Fund did not recover this advancement, nor did it intend to. The Local Limited Partnership paid the August 2009 debt service payment and all subsequent debt payments to keep the loan current. On September 22, 2009, the lender agreed not to foreclose for failure of the borrower to make the June 30, 2009 payment of approximately $44,482. The Forbearance Agreement, effective as of June 30, 2009, required the borrower to pay the $44,482 delinquent amount over nine payments of $4,942.45 beginning September 30, 2009 and ending on May 31, 2010. All payments were made. The General Partner negotiated with the Local General Partner on alternative ways to exit the Local Limited Partnership and the Fund’s interest in the Property was transfered to the Local General Partner for no consideration on December 31, 2012. The Compliance Period expired on December 31, 2010. The General Partner estimates that this transaction will result in 2012 taxable income of $3,770,000, or $103.30 per Unit. The Fund no longer has an interest in this Local Limited Partnership.
As previously reported, the General Partner is working towards a mid-2013 termination of the Fund’s interest in the Local Limited Partnership that owns Webster Court, located in Kent, Washington. However, the General Partner has yet to receive a response to the notices that were sent to the Local General Partner to sell the Property. The General Partner sent a default notice to the Local General Partner in December 2012 as a result of their lack of response. It is anticipated that the General Partner will enter litigation to enforce its sale rights, which is projected to cost the Fund approximately $200,000. Net sales proceeds, if any, as well as taxable income, are unknown at this time, as is the timing of a final transaction.
As previously reported, the General Partner anticipated the Fund’s interest in the Local Limited Partnership that owns Hemlock Ridge, located in Livingston Manor, New York, would terminate in December 2010, at the earliest. The General Partner and Local General Partner are currently negotiating an exit strategy to dispose of the Fund’s interest in the Local Limited Partnership for a nominal sum. A transaction is currently projected to occur by June 2013. Net sales proceeds, if any, as well as taxable income or loss, are unknown at this time.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable
Item 4. Controls and Procedures
Disclosure Controls and Procedures
The Fund maintains disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended (“Exchange Act”) is recorded, processed, summarized and reported within the specified time periods. The Fund’s Chief Executive Officer and its Chief Financial Officer of the General Partner (collectively, the “Certifying Officers”) are responsible for maintaining disclosure controls for the Fund. The controls and procedures established by the Fund are designed to provide reasonable assurance that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.
As of the end of the period covered by this report, the Certifying Officers evaluated the effectiveness of the Fund’s disclosure controls and procedures. Based on the evaluation, the Certifying Officers concluded that as of December 31, 2012, the Fund’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including the Certifying Officers, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
The Certifying Officers have also concluded that there was no change in the Fund’s internal controls over financial reporting identified in connection with the evaluation of the Fund’s controls that occurred during the Fund’s third fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Fund’s internal control over financial reporting.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
PART II. OTHER INFORMATION
Item 6. Exhibits
|
31.1
|
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
31.2
|
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32.1
|
Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
32.2
|
Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101.INS
|
XBRL Instance Document*
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document*
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document*
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document*
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document*
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document*
|
|
|
* Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise not subject to liability under that section. This exhibit shall not be deemed to be incorporated by reference into any filing, except to the extent that the Registrant specifically incorporates this exhibit by reference.
|
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 14, 2013 BOSTON FINANCIAL TAX CREDIT FUND VIII,
A LIMITED PARTNERSHIP
By: Arch Street VIII Limited Partnership,
its General Partner
/s/Kenneth J. Cutillo
Kenneth J. Cutillo
President
Arch Street VIII, Inc.
Arch Street VIII Limited Partnership
(Chief Executive Officer)